Are you paying too much for your business energy? Unhappy with the service you’re being given? In this article, we help you learn how to get out of a business energy contract.

A guide on cancelling your business gas and electricity contract

The structure of the UK energy market ensures switching to a new contract is difficult. Use our guide to save time, terminate your current contract and initiate a new agreement.

Terminating a business energy contract vs. cancelling a domestic energy contract

Unlike the domestic market, it’s not straightforward to simply change to new energy rates in the business market. Business gas and electricity contracts are set for a fixed length of time (generally at least 12 months; with some contracts extending to three years or more). Your business is tied to this contract until it expires.

Your business gas and electricity contract wording will indicate a specific period of time during which you can invoke termination and switch to another supplier.

Look out for your renewal letter

Ofgem brought in new rules that providers must send renewal reminders to smaller businesses three months before the end of the contract. However, if your business doesn’t fall into the classification of being a microbusiness, you won’t receive a renewal letter or reminder, so it’s up to you to keep an eye on these deadlines and manage the terms and conditions set out.

Is my business defined as an energy microbusiness?

Do you:

  • Consume less than 200,000 kWh of gas a year?
  • Consume less than 55,000 kWh of electricity a year?
  • Have fewer than ten employees (or their full-time equivalent) and an annual turnover or annual balance sheet total not exceeding €2m?

If yes to any of the above, your business may be categorised as a microbusiness when it comes to energy.

The best way to get out of your business energy contract

Send a termination letter

We advise that you diarise your contract end date and send a letter of termination in advance according to the contract terms and conditions. A termination letter is the best way for you to give a cancellation notice and get out of your existing contract.

Send your contract termination letter via recorded delivery or include a read-receipt on your emails so that you have proof that the notice has been received by the supplier.

Better yet, if you use our energy management services, we’ll negotiate or conduct a comparison on your behalf before the contract secured by us comes to an end.

When can I send a termination notice?

As long as the cut-off date for cancelling your energy contract is in the future, you can send a termination notice to your supplier at anytime.

What should I include in a termination notice?

  • Your energy account number
  • Written on a company letterhead or come from a company email address
  • Signed by a person recognised by the electricity company
  • All you need to write is “please terminate our electricity contract when it ends on [insert date]”.

What happens if you don’t terminate your existing agreement?

If your business energy contract has expired and you don’t cancel your existing agreement, your current supplier will extend it for another term by default. This may sound acceptable to you, BUT remember that they are likely to increase your rates by as much as 30-100%. You’ll no longer be under contract, and will be charged the most expensive available until you sign up for a new contract.

That’s why it’s highly recommended to exit or renegotiate your existing contract before your contract end date.

What happens if I want to end my contract before the termination date?

You won’t be able to cancel a business energy contract (without incurring penalties at the discretion of the supplier) unless you have a valid reason for doing so – such as moving business premises.

Next step: switch and save

Once you’ve served your termination notice and been assured of its receipt, you can begin the process of switching to a new supplier.

Comparing quotes

Once you have finalised the contract termination process, you can begin conducting a whole-of-market comparison for the cheapest energy prices and the most suitable contract.

This is an important – but potentially time-consuming and confusing – process. That’s why it’s advisable to seek the services of an energy broker who can do all the legwork and conduct the process on your behalf. Brokers can also often find cheaper deals through their relationships with suppliers.

Moving to a new supplier

If you’ve procured your energy contract using the services of an energy broker, then they will oversee the entire switching process on your behalf. You’ll just need to supply meter readings to confirm your final invoice from your existing supplier.

Top tips to remember

  • You only have a specific time period in which to terminate your commercial gas and electricity contract.
  • Refer to your original contract terms and conditions or contact your supplier to establish where your termination letter should be sent.
  • If you don’t get out of your contract before the termination period, your contract will be rolled over for at least 12 months.
  • An expired contract with no new agreement in place invokes expensive out of contract rates.

As independent energy consultants, we use our collective buying power to get you lower prices from UK gas and electricity companies to save your business money.